American Airlines parent plans to cut 13,000 workers

Too early to gauge effect in Chicago

union leader vows to 'challenge it where we can'

AMR Corp., parent of American Airlines, wants to cut some 13,000 jobs, about one-seventh of its workforce, as part of its bankruptcy reorganization, the company said Wednesday.

The Texas-based airline employs about 9,900 in the Chicago region and 88,000 nationwide. The impact on jobs at Chicago O'Hare International Airport, where American is the No. 2 airline next to United Airlines and accounts for 36 percent of passenger service, is not clear. An airline spokeswoman would only say it was too early to predict the effect on Chicago-based employees.

American executives have said in the past that O'Hare, one of American's flight hubs, is a key piece to its business strategy. And the airline said Wednesday that it plans to build its network by 20 percent over the next five years by increasing departures in its five key markets, which are Chicago, Dallas/Fort Worth, Miami, Los Angeles and New York. American Airlines serves about 23 million passengers annually at O'Hare.

"We have been reassured by American that Chicago remains a key part of its long-term business strategy and that any immediate or long-term impacts will be very minimal for Chicago," said Chicago Department of Aviation Commissioner Rosemarie Andolino.

However, Sean Doyle, president of local 512 of the Transportation Workers Union, called Wednesday the "worst day of my career."

Even if flight service at O'Hare is not significantly reduced, the region could stand to lose dozens or even hundreds of Chicago maintenance worker jobs as those functions are outsourced, said Doyle, whose union local represents about 1,300 workers at the airport.

"It's just devastating to the workers," he said. "These are decent-paying American jobs that are just going away."

His union represents workers who operate a cargo facility, fuel airplanes, drive buses and clean aircraft cabins, among other functions. The average age of a worker in the union is 48, with an average tenure of 18 years.

"You have a professional, dedicated workforce who take pride in work having the rug pulled out from under them in the twilight of their careers," he said. "It's unconscionable."

The airline said Wednesday that every employee work group, including management, must reduce its total salary and benefits costs by 20 percent. The move will save $1.25 billion per year, the company said.

"While we are now firmly on a path to a successful growing future, we must acknowledge the near-term pain these changes will require," Tom Horton, chief executive of AMR Corp., said in a letter to employees Wednesday. "That's especially true because we will end this journey with many fewer people. But we will also preserve tens of thousands of jobs that would have been lost if we had not embarked on this path."

A breakdown of the 13,000 job cuts in round numbers includes 4,600 mechanics, 4,200 fleet service and other transportation workers, 2,300 flight attendants, 1,400 managers and support staff and 400 pilots.

Besides job cuts, the airline will make changes to employee medical coverage and coverage for retirees. The airline will seek bankruptcy court permission to terminate its defined pensions plans, which would be replaced by 401(k) plans with a company match. Profit-sharing plans will also be affected. And the airline will outsource more work, such as some aircraft maintenance, and change work rules to increase employee productivity.

James Little, international president of the Transport Workers Union, which is slated for about 9,000 job cuts nationwide, said he was shocked by AMR's proposals, the concessions they ask of his union members and the extent to which the company wants to outsource maintenance work. He said the union has hired consultants to evaluate the company's plan and "help pick it apart and see if it makes sense."

"We're going to fight it," Little said. "We're going to challenge it where we can."

All told, the company aims to make cuts of more than $2 billion by 2017, not only from layoffs but also by restructuring debt and leases, grounding older planes, improving supplier contracts and other initiatives. It also aims to boost revenue by $1 billion.

Reaction from Chicago officials was supportive.

"American Airlines' decisions today demonstrate its commitment to provide better service for its customers while maintaining its important place in Chicago's economy," Chicago Mayor Rahm Emanuel said in a statement.

Andolino said the restructuring will give American the flexibility to invest in Chicago, especially in international flights.

"By making the tough decisions the company is now making, American is preserving the future of its business and jobs in our communities for the long run, which is good for Chicago and for O'Hare," she said.

The parent of American Airlines and American Eagle regional service filed for Chapter 11 bankruptcy protection Nov. 29. The filing was anticipated. The airline was loaded down with costs that other airlines cast off in their own bankruptcies after the9/11attacks. American said it simply couldn't compete. Its bankruptcy gives the airline a window of opportunity in which to cut costs.

Prior to filing, American Airlines executives tried to stave off bankruptcy to protect employees, investors, suppliers and others who lose out in a Chapter 11 filing. But rising fuel costs and a sour world economy squashed whatever hope the airline had to honor its obligations. Meanwhile, the money-losing company fell from its perch as the country's largest airline to No. 3 as competitors merged and grew.